Sole proprietorship

A sole proprietorship has a single business owner with complete control over business and profits, as well as personal liability for debts. A business owner can use their personal name for the business or operate under a separate name.

Partnerships — LP, LLP and LLLP

Two or more people can enter into a partnership, wherein each person is responsible for the actions — and debts — of the others.

Limited liability companies — LC, LLC, Ltd., Co. and PLLC

LLCs take their name from one big pro: limited liability that protects you personally. While they operate like a hybrid partnership–corporation, they don’t necessarily adhere to the rigid structure of a corporation. LLCs also don’t place personal financial obligation on its members.

Corporations —Corp., Inc. and PC

Corporations too offer personal financial protection to their shareholders and limited liability, but at the cost of having to adhere to a tight structure. Corporations also require more time and money to set up than other entities do.

Should I hire a professional?

Though you aren’t required to hire a professional to start your business, an expert in your field could help prevent future problems. Research your industry thoroughly to determine if you can benefit from the extra input. If you’re an industry expert yourself, you might be comfortable skipping this one to chip away at already steep startup costs.

What documentation will I need to set up my business?

Articles of incorporation. If you’re looking to form a corporation, you’ll need to file your articles of incorporation with your state. This set of documents marks your intent to create a corporation with details as to your services or products, how you run your company and any stock you’ll issue, among other information. You might benefit from a professional early to keep the legality of the articles aboveboard.

The scope of your business. A solid business plan can help secure funding early on and provides a road map to better guide your ambitions.

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Bottom line

Once you’ve nailed down your plan, it’s important to select the right type of business structure. The US is a huge market to put a foot in and expand out of, so don’t be afraid to start building your customer base locally.

Frequently asked questions

Yes, though you might get away with an outline of a business plan. Most small businesses fold within the first five years. A solid plan provides clear direction, potentially improving your chances of long-term success.

Many types of loans and alternative sources of financing are available. Compare your options among many lenders to find the most affordable financing you’re eligible for.

How much you’ll pay in taxes depends on your business structure, the state you operate in and other factors. The Small Business Administration’s site provides useful tools that can simplify the taxes you can expect to pay and when.

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